It's not uncommon for Realtors and related personnel of the Real-Estate field to find themselves intertwined in complex lawsuits due to circumstances they believed were totally unforeseen.

Buyers have filed complaints against Agents for various reasons, from failure to inform a buyer of a gruesome death in the home or office, or of other "pertinent" information, typically not as vulgar as the aforementioned...

Costs in legal battles, especially in Real-Estate cases are extensive and far-reaching, given the sheer value of homes and commercial properties. Luckily for agents (who might otherwise be exposed to hundreds-of-thousands of dollars in fines and penalties), Insurance carriers offer "errors and omissions" policies or "E&O" to grant coverage to limit your liability in these circumstances.

Underwriters for these policies find claims relating to issues in property valuation, contract errors, escrow, structural or infrastructure issues, titling dilemmas, and mold infestation problems. Another extremely common situation arises when a Realtor is sued for failing to disclose the presence of a lien on a home or property, which binds the new owner to the previous owner's debts. Consider this protection a necessity, not unlike malpractice insurance for attorneys and surgeons. 

When an angry buyer files a lawsuit against a broker or agent for failing to disclose (something) they reasonably should have known, or for misleading the client, the client's liability is implicated and exposed. While E&O will usually cover a matter of this sort, these policies don't protect the Agent from intentional deceptive fraud. 

Coverage is typically available up to $1,000,000.00, but can be increased substantially higher or lower depending on the agent's annual revenue, as well as other concerns, including whether the individual is part of a larger Real Estate brokerage, or acts as a solo Agent. An average yearly premium can range from $500.00 to $1,500.00, but depending on location, can be much more (or less) costly. Some states require these policies; however, nationally, only around one-third to one-half of Realtors are covered, despite recommendations by state associations. 

While only ten to twenty-percent (20%) of Agents see a claim filed against them, the action is often enough to cripple the business, or effectively ruin the Realtor's main source of income. To place things into perspective, this is similar to driving a vehicle on a highway. While none of us wish for a car-accident, and even fewer of us expect finding themselves in an auto-wreck, you probably wouldn't want to accrue the risk of driving on public roads without auto-insurance. While the likelihood is uncommon, the stakes are high.

Comparing policies can be extremely difficult due to local and state regulations, as well as differences in the market per each region. As such, it's best to consult a knowledgeable Insurance broker to discuss your options so as to not fall-victim to a stripped-down, bare-bones policy or those with unnecessary "bells-and-whistle." We advise utilizing a broker to properly comb-through the fine print, and to explain the advantages and disadvantages of certain policies against others. Often, E&O policies vary greatly between one-another, and coverage differences between even neighboring states can be numerous. We do not recommend contacting a national carrier to purchase the "off-the-shelf" policy, just as you wouldn't pay $750,000.00 for a $500,000.00 property...

Don't be fooled by the assumption that because you're insured, you'll be taken advantage of by eager scam-artists, as in-fact, it's more so just the opposite. Living in a "sue happy" society, the litigious crowd has by now, learned the money often lies within those in a professional field who are uninsured. Cardinal Alliance Group recommends using a reliable brokerage to obtain a cost-effective E&O policy for any and all Real-Estate agents; saving $1,000.00 in a given year is simply not worth throwing your valuable reputation, as well as your financial well-being, down-the-drain.

If you're a member of the prominent Real-Estate industry, Cardinal Alliance recommends contacting us as soon as possible to discuss your options of a comprehensive E&O policy specifically targeted to Realtors and related personnel. Our expansive relationships with partner-brokerages and carriers offer us a unique edge for competitive rates, as well as Cardinal Alliance's individualized one-on-one client support, including claims assistance. 

Source:- Wall Street Journal

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